ATCO Ltd. (ACOX) Earnings Call Transcript & Summary

Well, good morning, everyone. Thanks so much for taking the time to come. We don't have any seats for you all back there. There's a few extra chairs over here. So, I think Chris Barco, where is Chris? Was saying we're one of a very few in-person Annual General Meetings left in the city. And I think maybe that's one of the -- actually, there's a lot of silver linings that came out of our quarantine period during COVID. But I think one of the not so silver linings is the fact that you, our shareowners, our suppliers, our customers, media, associates and great friends don't have an opportunity to come and actually engage with all of us. And it's a very special time for everyone here to be able to see you all. This is our 58th Annual General Meeting. And there are so many familiar faces that I had the opportunity to see today, which was wonderful. And I'm just going to put in a little plug here because we look forward to seeing you all throughout the summer series for the 50th anniversary of Spruce Meadows this year. Before we begin, I will just take a safety moment. And if an emergency occurs, we'll exit through the foyer doors that we came in and take a left to the front entrance, take a right. Our mustering point is over on Ninth Avenue at the Marriott Hotel. And so the great staff of the Fairmont Palliser will assist us and direct us, if something occurs. And as we commence today's meeting, I do want to honor the traditional territories and the homelands upon, which many of our operations and facilities are located. Our team, all of the members of the ATCO family, have tremendous respect for elders past and present and the diverse history, languages and culture that they represent. The ceremonies for any of you who have had the opportunity and the privilege to participate are really extraordinary. And I know that, if you do get a chance to go to a powwow you really should take up the opportunity, because the passion, the spirit flows throughout the people. And today, we're gathered on the ancestral lands of Treaty 7 signatories, and that includes the Blackfoot Confederacy, which is composed of the Siksika, Piikani, Kainai Nations, also the Stoney-Nakoda including the Chiniki, Bearspaw and Wesley Nations and the Tsuut'ina. And the city of Calgary is also home to the Métis Nations of Alberta Districts 5 and 6. And I would like to welcome and such an honor to have you here, Chief Ouray Crowfoot. Thank you. Lovely to have you. I have to tell you a funny little story about last year when Chief Ouray is from the Siksika Nation. And our Lead Director, Rob Routs, asked him a question about his land claims and resolution with the Federal government. And Dr. Routs said, "How long has this been taking you?" And I think Chief Ouray said, "170 years." All done. And I would also like to welcome Her Worship, Mayor Jyoti Gondek for coming today. Thank you so much for taking the time to come. It's a rare occasion that the mayor of our city, of any city, would actually take the time and have the interest in one of the head companies founded here in Calgary, in our enterprise. So thank you very much for coming. And for your great leadership, in particular, attainable housing. I'd also like to welcome my family. My mom, Marge Southern, is here. And while maybe a little compromised on mobility right now, oh my goodness, you should hear her lecture still. And there's always clippings coming out of the paper. Did you know this? Maybe you should think about this. I'd also like to welcome my husband, Jonathan, and say thank you for all of your support. My children, Kelly, Kyle, Ben, thank you for being here. My sister, Linda and her husband, Tom and her son, Charlie, and Ron is not able to join us, but they are my greatest supporters, and I cherish every moment with all of you. David Dodge is here, former Director of ATCO, but much more impressive on his resume is former Governor of the Bank of Canada, and incredible adviser to many and a great friend of our company, and he's here with his lovely wife, Chris. Ms. Anne and Terry and Dan French are here. Sorry that, Bas couldn't be with us. Bas is Director Emeritus for ATCO. Siegfried Kiefer, many of you know Siegfried. He's sitting right next to Doug Graham, who used to have Jason Sharpe's job and ran our natural gas utilities. Jeff Wood, Jeff is here representing the Wood family. He's a long-time shareholder, and our families go way back. Jeff's father was our Corporate Secretary. His uncle was our CEO of Canadian Utilities. And his cousin Dana is my cousin from our twin sister moms. Kim Sturgess. Thank you, Kim. Kim is the most incredibly passionate person in Alberta with regards to how precious and dear our water is, how we can do a much better job of conserving it. And I have no doubt within the next decade, it will be the gold of the future. So we must look after it. And Kim, you've done such a wonderful job in Alberta and throughout the nation. Thank you. She's sitting beside Eddie Goldenberg. And Eddie has been on the news quite a bit recently with our new parliament, and his great advisory to many prime ministers, including this one. And long-time shareholders. [ Ed McCullough ] is back. Where's Ed? There you are. We missed you last year, but nice to see you back again. And Bill is here, [ Bill Manela ], and Bill rode his bike here this morning. Cold hands, warm heart. Norm, Sharon, King, it's always great to see you, Norman Sharon. Emil, wonderful to have you back. Andrew, you are such an interesting attendee. He told me that, he only could afford a couple of shares, but he really likes to hear about what we have to say on the economy, our company and the nation. Thank you for joining us, Andrew. And Joy Halverson is here as well. And Joy Shareholdings go way back, and she told me way back to you, mom and dad, starting ATCO. Thank you very, very much, everyone, for being here. There's Joy over there. I'd like to introduce you to my wonderful colleagues that are on the dais here with me today. Katie Patrick is your Chief Financial Officer and Investment Officer, and what an incredible woman Katie is. She's seated next to Adam Beattie, the President of ATCO Structures, who you'll hear lots from with regards to attainable housing, modular housing and of course, our founding business, ATCO Structures. And next to Adam is the newly appointed CEO of Canadian Utilities, Bob Myles, and I couldn't be more confident, more thrilled to have Bob. He is the most terrific executive leading the ship for Canadian Utilities. Now, I'm staying on as Executive Chair. So on behalf of shareowners, we will be watching him. And next to Bob is our Corporate Secretary and General Counsel, Kyle Brunner, who keeps us all in line and out of trouble. Thank you, Kyle. There's many officers and people of our corporation also here with us today. And I would like to once again express my deepest appreciation to all of our shareowners. I know many of you are shareowners, our dear friends, our customers and suppliers. And thank you for your ongoing commitment, which is invaluable to our organization. And as we stand at a pretty critical juncture in our country's province and company's future, and as we navigate through these very turbulent times, the uncertainty that we faced in recent years is likely to persist and potentially intensify. Trade tensions, supply chain, inflationary pressures, geopolitical conflict and the accelerating pace of technological change are all converging to create a stubbornly complex and unpredictable environment. And in these times, it seems that the only thing we can be sure of is that nothing stays the same. But despite these challenges, we have reasons for great optimism. For example, the government of Alberta has recently announced key policy changes within the province's utility landscape, and this is a really good thing. It includes hydrogen blending in the natural gas distribution system. It includes refining the design of the electricity market and aligning the province's transmission policy with the realities of today's electric grid. And while there's still a great deal of work to do on the details for each of these fronts, they represent important first steps toward a more modern legislative framework for economic development, especially in the utility investments here in Alberta. I also take heart that our newly elected Prime Minister has committed to take bold and decisive action in order to build a stronger Canada, from doubling our national housing output and forging new trade corridors to establishing Canada as a global energy superpower, and he did include conventional as well as new energy, and dramatically increasing our defense spending in order to achieve our NATO commitments. And these aren't merely aspirations. They are imperatives of the highest order. And now is the time for unity, resolve and unwavering execution because the future of our nation demands nothing less. The courageous people of ATCO share this conviction. And already, we are building critical infrastructure that will unlock Canada's full potential, from housing and pipelines to power grids, hydrogen hubs, carbon capture and defense systems. And for years, ATCO has advocated for the development of energy corridors, not just east to west, but north-south as well. And we actually started on this journey, north-south, from Inuvik all the way to the 49th parallel with the implementation of our Alberta power line. The Alberta power line today is 40% owned by 7 Indigenous communities along the right-of-way and close to the right-of-way. And this is a very, very important aspect of what we need to consider and do in the future with future infrastructure projects. We do need to reach more global markets. We do need to have greater access to tidewater. Our vision to create this north-south corridor has been in the back of our minds for day, oh gosh, I think we started talking about this at least 20 years ago with our Indigenous partners in the Northwest Territories. And while political will has long been the stumbling block, the benefits of these corridors have never been clearer, and the support has never been greater. Canada may be on the verge of a historic investment boom, from ports and rail to West Coast LNG and ammonia exports, but each of these projects have a common foundational need, Indigenous partnerships. In fact, of the more than 500 major resource and energy projects planned or underway here in Canada, 73% run through or near Indigenous territories. And the value of these projects is estimated at nearly $100 billion. So can you imagine the extraordinary prosperity we could co-create for these communities by enabling them to participate fully in such projects. We've been advancing this kind of model for decades. Naka Power is our enduring alliance with the Denendeh Investments, and it is close to 4 decades old. In fact, I'm not aware of any Indigenous equity partnership, in the energy and utilities sector anyway, in Canada that is older or stronger than this partnership. And as Canadians, our ability to move quickly and at scale to unlock the value of Indigenous equity partnerships depends on our ability to move collectively as true equitable partners. And without question, recent geopolitical tensions with our closest ally and our largest trading partner have revealed the fault lines in Canada's economic landscape. And to bridge these gaps, we must pursue genuine Indigenous economic reconciliation. And quite frankly, I don't see that there is any other path. However, we must also have fair and equitable regulation for these projects. They are all encompassing infrastructure assets and particularly for wires and pipes. Now, the Alberta Utilities Commission has been very forward thinking with its performance-based regulation that it implemented in Alberta several years ago. The performance-based framework incentivizes utilities in Alberta to strive for greater operational efficiencies and then be able to share those efficiency gains with the ratepayers, the customers and with shareowners alike. And I am very proud of the innovative approach that our teams in ATCO Energy Systems have taken. And I'm very proud that the regulator is forward thinking in this performance-based regulation. Unfortunately, I must say, and I wanted to make you all aware of this, that we have recently realized that we, ATCO and its utilities and the AUC have a major difference of opinion. Now that's not always unusual. But in this case, it is in regard to how the application of the performance-based regulation is applied. And therefore, we are challenging the AUC's approach in the Alberta Court of Appeal on the basis that we were operating, we believe we were operating within the regulatory framework as it was outlined by the AUC. And our case will be heard later in the fall of this year. So I just wanted you to be aware of that because there may be some noise about it. But you've heard it from me. We believe we've delivered, and you'll hear more from Bob about how much we've delivered, in efficiencies, to the Alberta utilities later. So that's some of the context and the complexity that makes up our business environment of today. But overall, I can assure you that we are extremely excited about the future, and we look forward to sharing our journey with you. You'll hear more from my esteemed colleagues after the next item of business. So we do have to get to the formal part, and you're probably tired of listening to me. So we will go to the formal part of our AGM right now. And then I will open the meeting for questions from all of you. Kyle Brunner will act as Secretary for this year's meeting. Jennifer Villareal and Chantelle Rondeau of TSX Trust, our registrar and transfer agent, will act as scrutineer. Then the scrutineers have confirmed that there is a quorum present, and this meeting is duly and properly constituted for the transaction of business. Now only the shareowners of Class II voting shares and the holders of valid proxies of those shares are entitled to vote on the business, in the meeting today. And if you are a shareholder or duly appointed proxy holder who submitted voting instructions in advance of the meeting, your vote has already been registered with the transfer agent and will be included in the final count. Now, did anybody not get a proper voting ballot ahead of time? If you didn't, please raise your hand and the ballots are available for you in the meeting today. Anybody not get a chance to vote? Okay. Then we'll move on. So, in order to expedite matters, employee shareowners or duly appointed proxy holders will move and second the motions. And when the report of the scrutineers is complete, we will announce the results. Now the first item of business is the presentation of the annual consolidated statement with your auditor's report in there. And the next item is the election of directors. The corporation's nominees as proposed in the management information circular. Having a hard time with my throat here, Katie. Standing for election today are Dawn Farrell; Jason Kenney; Kelly Koss-Brix; Dr. Rob Routs, our Lead Director; Linda Southern-Heathcott; myself, Nancy Southern; Norman Steinberg; Dr. Roger Urwin and Susan Werth. Are there any other nominations from the floor? I therefore declare the nominations closed. May I have a motion to elect the directors?

I'm Becky Penrice, a shareowner. I move that the 9 persons nominated to be elected as directors serve until the end of the Annual Meeting of Shareholders or until their successors are elected or appointed.

Thank you, Mrs. Penrice. May I have a seconder, please?

I'm Colin Jackson, a shareowner, and I second the motion.

Thank you, Colin. Colin heads up our Treasury and Ms. Penrice is our Chief Administration Officer. The last item of business is to appoint the auditors, PricewaterhouseCoopers as the corporation's auditors for the ensuing year. And may I have a motion to adopt the auditors?

Good morning. Glad to see everybody out here. I'm Rob Routs. I'm a proud shareowner. And I move that PricewaterhouseCoopers, chartered accountants, be appointed auditor of the corporation to hold office until the next Annual Meeting of Shareholders or until a successor is appointed.

Thank you very much, Dr. Routs. And a seconder, please.

Yes. Thank you very much. I'm Norm Steinberg, a proud shareowner, and I also second the motion. Thank you.

And Norm is the Chair of our Audit Committee. Thank you very much, gentlemen. And I will now ask the scrutineer to provide the scrutineers' report so that we may declare the voting results. Now while that is happening, I want to take the opportunity to recognize a director who is sadly retiring from the ATCO Board this year. Bob Booth, a distinguished lawyer, an astute adviser and an absolutely wonderful human being. He's retiring after nearly 3 decades of service to the ATCO group of companies. Bob was a long-time partner at Bennett Jones and through his counsel and expertise, he helped countless projects and initiatives succeed while at ATCO. He has positively shaped ATCO's history. And through his mentorship and coaching, he added much value to the deliberations that faced both my father and me, helping us both succeed as well. And on behalf of the Boards of both ATCO and Canadian Utilities and our shareowners, I wish to express my deepest appreciation to Bob for his commitment, his loyalty, his friendship and to his family for supporting him for these past 3 decades. Thank you, Bob. Okay. I will ask Kyle to read the voting results.

The scrutineers' report indicates that shareholders voted in favor of the election of each nominee director and the appointment of PricewaterhouseCoopers LLP as the corporation's auditor for the ensuing year.

Well, I, therefore, declare the motions passed. And congratulations to all of our directors. I know on behalf of shareholders; they all thank you for your wise counsel and great advice. Thank you so much for your commitment, and the contributions that you continue to make throughout the community. I'd also like to introduce Courtney Kolla and [ Susannah Coburn ] from PricewaterhouseCoopers. Courtney is right there in front of me with Susannah. Thank you very much for your tremendous diligent and robust work on our financial statements. Well, this concludes the formal part of our meeting. And may I have a motion to terminate?

Good morning. I'm Derek Cook, and I'm a shareowner, and I move that this meeting be terminated.

Thank you very much, Mr. Cook. And a seconder?

I'm Christie Simpson. I'm a shareowner, and I second the motion.

Thank you very much, Christie, Ms. Simpson. The meeting is closed. And now I'll turn it over to Katie Patrick, so she can give you some exciting news on our financial results.

Thank you, Nancy, and good morning, everyone. I truly enjoy connecting with shareowners and the investment community, and I am also very pleased to be with you today. I will be updating you on ATCO's financial health and future outlook in concert with the remarks from Nancy, Adam and Bob. Specifically, I'd like to provide an overview of our financial results for 2024 and share how 2025 is unfolding from a financial perspective. Finally, I will touch on how the numbers come together from the growth, Adam and Bob will speak about, and how we will pay for it. While my story may sound very similar to prior years, I hope you as investors see the value in that consistency. The same messages of growth and resiliency demonstrate that we are on the right path. Now at a glance, here are some key stats that give you an instant read of the size, scope and scale of the ATCO Group of companies. We have a strong base of assets to build from, but let me point out, what is far and away, our most valuable asset, our exceptional people. Including affiliates and subsidiaries, there are more than 20,000 energetic, enthusiastic and expert team members working to deliver value to ATCO and our shareowners. Now, let's dive into the results for 2024. 2024 was a great year for ATCO and the companies we operate and invest in. Those team members I mentioned, they demonstrated continued excellence in operational, financial and strategic execution. This helped us achieve adjusted earnings of $481 million, up from $432 million in 2023. You can see in this chart that the $49 million of growth in earnings was evenly split between our Canadian Utilities business at $25 million and our other businesses at $24 million. This year-over-year growth was driven by a few factors. In our utilities, there was 3 main drivers of growth. Firstly, we saw growth of our rate base. Secondly, there was an increase in the allowable return on equity from 8.5% to 9.28% in 2024. And finally, we had the benefit of the efficiency carryover mechanism, which provided an additional 50 basis points of equity return in our distribution utilities. In Structures, as you'll hear from Adam, their base business continues to grow steadily and successfully in Canada, Australia and the U.S. And we are also seeing strong contributions from Neltume Ports investment as well as some of our other investments, which I'll talk about that segment in a moment. These results have been very well received by our investors in the market. And continuing this trend while delivering on the growth we have promised is our key focus. Now just last week, we released our Q1 results for ATCO, as well as Canadian Utility, of which ATCO owns 52.5%. ATCO had a very strong first quarter and achieved adjusted earnings of $160 million, up from $148 million during the same period in 2024. We are very happy with this result. This strong start to the year was in thanks, in part, to another quarter of increased results from structures. And I'll leave it to Adam to tell you just how many quarters in a row his team has delivered increased earnings. Our first quarter was also up due to very healthy performance from the natural gas storage business in ATCO EnPower. Last year, this area of our business had adjusted earnings of $38 million, which was 23% higher than 2023. And as we look to the rest of 2025, we expect our storage business to have a similar earnings profile to last year, thanks to securing favorable long-term contracts. Looking ahead, I will point out that we do expect some headwinds in our utility business that will moderate some of the earnings growth we saw last year for ATCO Energy Systems. Specifically, our allowable return on equity of 9.28% has been reset by the AUC to 8.97% for 2025 across our Alberta utilities. Overall, though, we will combat that with having rate base growth across our utilities and finding continued efficiencies throughout our business, which will translate to high-quality earnings for 2025 and beyond. Now, keen readers of our financial statements, whoever that may be, would have seen a renamed reporting entity called ATCO Investments. ATCO Investments is not so much a new venture, but rather a streamlined way to manage and report on a number of businesses and investments that we have at ATCO. Within this segment, I just want to highlight 2 investments that had a strong start to the year -- this quarter within Neltume and ATCO Energy, which is our newest acquisition, both delivering significant strong earnings for ATCO this quarter. Ultimately, we need to translate our earnings growth from across the businesses and investment into concrete value for investors. You can see the share price appreciation and dividends, also known as total shareholder return. Over the past year or so, we've really seen the recovery of our share price, both on a relative and absolute basis. This is attributable to our clear growth path and the trust and stability we offer investors. Here, you can see ATCO's total shareholder return for 2024 shown against the S&P Composite Index. I was almost tempted to drop in the data for Berkshire Hathaway, which delivered 25% last year versus our 29%. I'm not saying that ATCO will beat Berkshire Hathaway every year. But in the years that we do, you can sure bet that I'm going to mention it. But in all seriousness, we are very happy that we can show this story this year, and we remain extremely focused on keeping this trend going. Bob will speak to some of the growth projects and initiatives for Canadian Utilities, which can be quite capital intensive. The analysts and institutional investors who follow us are very keen to know our financing plans for these investments. As we look at some of the large upcoming projects, the size of our capital spend will require us to pull multiple levers of funding in addition to our own internally generated cash flow. We continue to have a very strong credit rating above many of our peers in terms of our A- rating at Canadian Utilities. So we certainly have opportunity for some funding to come from leverage to fund a portion of that growth. We're also open to and pursuing other forms of equity of funding. This includes Indigenous equity, as we've done many times in the past, including most recently with our Deerfoot and Barlow solar facility, it includes partner equity, as Bob will mention, with respect to the Heartland Hydrogen project. It could also include some private capital and some form of asset recycling. You can be assured that the decisions on how we will fund our growth will be about maximizing shareowner value. With that, I will conclude and invite Adam to talk about his exciting business.

Thank you, Katie, and thank you, ATCO. Good morning, everyone. I'm very glad to be with you all here today. At last year's Annual General Meeting, I told attendees I look forward to standing on this stage a year later and sharing exciting growth and accomplishments that ATCO Structures would achieve. I'm really thrilled to deliver on that promise. 2024 saw ATCO Structures continue to carry out our strategic growth plan and achieve our highest ever adjusted earnings result in the history of the company. Now, we have a brief but impactful video I want to share with you. As an overview of our exciting growth opportunities and strategies before I get into further details. This is how we build, baby, build. [Presentation]

I'm very lucky I get to have a lot of fun with my job. So our strategic vision is based on the conviction that modular building is evolving as a crucial part of the future for shelter and building solutions. And our strategy is focused on 4 main areas of business. Firstly, the continued expansion and operation of a world-class fleet of assets. I'm largely talking about the yellow banded trailers we know and love. Having a larger and well-utilized fleet creates more predictable, sustainable income streams for us and was a primary driver of last year's excellent results. The backbone of our success is this stable and steadily growing rental fleet business. It's consistently in demand for a few reasons. Its flexibility of applications for temporary and permanent building space, it's quick to deploy and operate and is very cost-competitive solution. The second area of our focus is building our brand and consumer awareness of modular and its advantages and opportunities. We are partnering with government and housing agencies to accelerate and scale the adoption of modular affordable housing solutions, where traditional building methods cannot achieve the pace required. This is just one example of how we value into our clients' needs. Just 2 weeks ago, we took part in a media event in Midtown Toronto, craning in the modules for another new supportive housing facility going into Ontario. And last week, just down here, we broke ground to construct and install a new apartment project in downtown Calgary with our partners, Attainable Homes Calgary. This will see an 84-unit complex of 6-story apartments occupied in under 19 months. A similar nonmodular build across the road is planned to take 48 months to deliver. Our units for our project will be manufactured in under 70 days. Another area of strategic focus is expanding our and tailoring our modular building solutions to the needs of the education, health care, infrastructure and commercial sectors. It's not just homes and workforce housing that can enjoy modular construction benefits like speed, quality, certainty and flexibility. And finally, our fourth main strategic driver is innovating our products and processes to produce affordable modular residential housing that meets the growing need for homes. That's here in Western Canada, where we already have a leadership position and also within other markets across Canada, the U.S., Latin America and Australia. Evolving innovations and growing acceptance of modular means this building method is gaining traction throughout the world. So how did we do in delivering our strategy in 2024? We grew our base business by increasing our rental fleet to over 25,000 units globally. We are on track to reach our target of 40,000 units by 2030. Not only did we grow the volume of products, we also grew the average rental rate by 9%, all this while keeping our average utilization rate at our target of around 75%. We announced more than $375 million in new contracts in 2024. These contracts included 2 significant resource infrastructure projects in Australia, showing we are still the prominent workforce housing provider. We grew our brand and awareness with our customers, creating more than 500 new customers in the U.S. alone last year. Last year, we doubled our market share in the U.S. And while this is still an emerging market for us, the U.S. has significant runway for expansion in our business. We opened a new manufacturing facility in South Australia, bringing us to 4 locations in Australia and 12 best-in-industry manufacturing facilities worldwide. Thanks to all of these achievements by a tremendously talented and committed team, we are able to successfully deliver thousands of modular projects throughout all our locations to the satisfaction of our valued clients. As you have likely seen with our most recent result in Q1, we marked 11 consecutive quarters of delivering year-over-year adjusted earnings growth. And with this, we are on a good trajectory to continue our path for growth well into the future. I have another number, and it's very small from 2024, but incredibly important to our team. At our Calgary manufacturing operation this year, and Walt is here, I see him hiding down there, there were 0 recordable injuries in our operations. Now for those of you that don't know, a total recordable injury frequency also called the TRIF of 0 is a world-class safety accomplishment, and demonstrates our organization's proven commitment to safety as a value. This extends beyond just this manufacturing operation. Our global TRIF was 0.9, which is a fantastic reflection of the importance our culture places on safety within our workplaces. Our standards and safety leadership are world-class and a testament to our employees' commitment and values. And I thank our team for their resolve. I've got nice pictures here as well. So we'll enjoy them. Finally, I'd like to discuss how 2 important and recent acquisitions are positioning us for growth. Last year, we acquired NRB Modular Solutions. NRB are the leading permanent modular building company within Canada. And with this acquisition, our Canadian manufacturing locations have expanded from 2 facilities to 5, increasing our manufacturing capacity, product and skills capabilities, and access to new markets for all of their product offerings. With our integrated modular operations, we are well positioned to be a solution for Canada's housing plan. Our Triple M division, which we acquired in 2023, is helping to cement our standing as the largest single-family modular home builder in the region. The NRB acquisition, along with Triple M and our collaboration with Viva Homes by ATCO, Christy's down there, positions ATCO to offer a full suite of commercial, residential, educational and all forms of modular products across Canada. We believe these additions significantly enhance our business in the coming years, and creates new opportunities for our people to also grow their careers. So in closing, we have multiple levers to adjust our strategy in response to market changes, and a talented global trade team driving industry-leading outcomes. We see ourselves prepared for the future challenges and opportunities as they arise. And I'd be happy at the end of -- after all the speeches to take some questions, if anyone would like, as we love talking about modular. But now I'd like to invite my distinguished colleague, Bob Myles, to the podium, please.

Thank you, Adam. Thank you, Katie. And wow, thank you, Nancy, firstly, for the vote of confidence in me and our team. I definitely look forward to working with you. As I said last week in Edmonton at the Canadian Utilities AGM, I've always enjoyed working with you, and I'm going to continue to enjoy working with you, even in your role as Executive Chair. So with that, I'm very happy to be with all of you today. Importantly, it is my distinct honor to represent the great people of Canadian Utilities, who have brought us to where we are today. With Katie capturing the overall financial update and how the business performed in 2024, I would like to make some comments about Canadian Utilities team and the achievements they made, the significant contributions to earnings of $340 million in 2024, and also comment that we've had a very significant growth in the first quarter of 2025. So I'm very proud of the team at Canadian Utilities. We believe there is a bright and bold future for our customers, our communities and our investors. Our team at Canadian Utilities is committed to growth and in delivering on our strategy. Canadian Utilities is a diversified energy company with a solid foundation of high performance focused on long-term growth. We optimize capital investments across the energy value chain, and we operate safely and efficiently to deliver lasting value to customers, communities and shareowners. We will get to this bright future by focusing on a few key imperatives. Everything that we do in Canadian Utilities will fall into these 3 pillars. The first pillar is growth and prosperity. This involves pursuing growth projects like the Yellowhead pipeline, and it involves developing new relationships and mechanisms with our partners, our regulators and our customers to create an industry built on mutual trust. We have developed a very healthy pipeline of opportunities across Canadian Utilities. Second is operational excellence. This involves creating the most efficient, reliable and simple operating model. It's about streamlining and realigning our business for maximum effect and impact, and it definitely involves being a leader in our safety performance. And thirdly, we are very focused on financial leadership. This includes being able to effectively finance our growth plans in new and innovative ways, as Katie has already mentioned. It's also about identifying partnership opportunities and streamlining operations to drive efficiencies and create financial capacity to support our growth ambitions. It includes the results we deliver to our shareowners, including Canadian Utilities' largest shareowner, ATCO. Despite the ongoing political trade and policy uncertainty, I want to assure you that our strategy is resilient and opportunistic. The stable utility business of ATCO Energy Systems and the growth and yield prospects of ATCO EnPower provide us the optionality and diversification opportunities. We continue to be bullish on the energy prospects for Alberta. We have a growing province and continued growth in the demand from the residential, commercial and industrial sectors. Getting to a green light on new energy infrastructure in Canada is not for the faint of heart. Thanks. But it's more than getting infrastructure built. It's also about making sure our energy offerings are equitable and affordable for customers and that our regulatory framework enables us to do this. I want to thank ATCO employees who have worked hard to deliver safe and reliable energy service to our customers. They have prioritized making our operations more efficient and have put the customer at the center of our business. As Nancy mentioned, and I'm very proud of this, we heard a lot of numbers today, but in the 2023 to 2028 performance-based regulation period, we are delivering more than $0.5 billion of savings directly to customers through lower rates, which is an 8% reduction in distribution fees. And these are the charges for the pipes and wires that deliver both gas and electricity to each of our homes and businesses. And I think that's a huge accomplishment for our company. Now ATCO is proud that we are the only utility that was able to reduce distribution rates for Albertans by driving efficiencies as we safely build and operate our utilities. Now, let me shift to providing you an update on some key projects. Progress on each of these projects that I will discuss involves collaborative efforts with government, regulators and partners and customers, as well as many local communities. Last June, together with our partner, Shell, we made the final investment decision, or FID, to proceed with the first phase of the Atlas Carbon Storage Hub. The first phase of Atlas will provide permanent underground storage for CO2 captured from Shell's Polaris project. We have already drilled 2 wells and are in the process of constructing the associated pipelines that will allow us to inject CO2 into an underground reservoir. The next phase of Atlas will be aimed at meeting both ATCO EnPower's and Shell's carbon storage needs with the remaining capacity being available for third-party emitters through an open access process. Katie already mentioned the strong results we're seeing from our natural gas liquids and natural gas storage business. Unlike some of our other businesses, the assets -- these assets are largely out of mind and out of sight for most folks, but they are incredibly stable and dependable earnings drivers. And they play a key role in the energy transition by insulating against periods of supply and demand volatility. We're already seeing growth in the gas storage area through the development and soon to be operating LNG Canada facility. We do believe that gas storage is a great opportunity for our company as LNG continues to grow in Canada, which we believe it will. I'd also like to give you an update on our Heartland Hydrogen Hub. Last year, we partnered with Linde Canada, who will be both an operator and an equity partner in this project. This partnership provides the quickest path to reach a final investment decision as Linde's global project expertise will help improve the overall process, cost and timing of this project. The establishment of a stable federal and provincial political environment will have a big impact on the timing and development of this initiative and in particular, our ammonia export project. The ability to develop rail access to Tidewater will be the key driver to allowing us to provide a competitive pricing to our customers in Asia. Finally, I'd like to provide a more detailed update on the Yellowhead pipeline project. This is a great example of infrastructure that enables Alberta prosperity and drives rate base growth expectations. We have a brief video that will provide some color on the Yellowhead project. [Presentation]

At a time when the need for Canadian energy infrastructure is in the spotlight, the Yellowhead pipeline remains a critical infrastructure project needed to support a broad range of customers and industries to meet Alberta's energy needs. The Yellowhead pipeline project, which is already 90% contracted, is on schedule and adhering to all regulatory processes. We are enabling the province's competitive advantage while addressing the energy needs of our growing population and industries. As Nancy indicated, Indigenous equity partnerships are crucial to the mutual advancement of Canada and Indigenous communities. And I'm very pleased to announce that the ATCO Energy Systems team is working diligently to secure a meaningful Indigenous ownership position on this project, and we aim to have that finalized within the next 12 months. I truly appreciate being able to update you on Canadian Utilities. I look forward to any questions you may have during our Q&A period. So in closing, we're always taking a long-term view as to how we drive growth for our organization. We have a great balance of stability and optionality, and a tremendous team working day in and day out to provide our customers, our communities with the energy and products they need. And that team is also there when climate events like fires and frosts and freeze-ups create operational challenges that impact the community. So as I turn it back to our Chair and CEO, I'll leave you with a video that demonstrates our team's commitment to the community and the response we delivered during Jasper Fire last year. [Presentation]

So proud of our teams. I hope you will agree with me that this is a terrific cadre of executives leading the businesses of your company. And I want to thank them so much for the tremendous work ethic they represent, the transparency, the camaraderie and the willingness to challenge each other, including me. And they don't worry about challenging me. That's for sure. I'm so proud of you all. Thank you very, very much. I'll just make a few comments actually because we didn't cover off the defense sector, which is important to your company. And the opportunities in Canada are really quite astounding, especially as Canada moves to modernize the NORAD system and strengthen our Northern defense. And just last month, our joint venture between ATCO Frontec and the Inuvialuit were awarded a 2-year contract, which is really exciting by the government of Canada to design a new design, build, install and operate a new polar over-the-horizon radar system in the Northwest Territories. The radar will use technology that can detect targets at very long ranges, and this is very needed in today's north. And the long range actually goes from hundreds to thousands of kilometers, well beyond our typical radar system today in the North Warning system. And it's just one of the examples of our strong linkages and our commitment to our military armed forces in Canada. And primarily, we do that through ATCO Structures and ATCO Frontec. It's this strong connection combined with the passion of ATCO Frontec's President, Jim Landon, that prompted us to start supporting the Invictus Games. Any of you are familiar with the Invictus Games for veterans. If you're not, it is such a healing event and such an inspirational event. And we deepened our support with our role as the overall co-presenting sponsor of the 2025 games in Vancouver and Whistler. And to capture the spirit of these games, I'd like to show you a little video. [Presentation]

And we look forward to continuing our partnership with the Invictus Games as a cosponsor in England 2027 and of course, supporting our great Canadian team for the next many, many years. And in closing, I'd like to once again thank my executive team, our executive team for your terrific commitment and dedication and all of the people of ATCO. Thank you all so very much. I want to thank our directors for your terrific wisdom, your guidance, your counsel, your challenges -- in your challenging in all of us as executives, and most importantly, advising us on how to best succeed. And again, thank you to Bob Booth for your terrific commitment to this enterprise. It has been a wonderful journey, lots of ups, but mostly ups, very few downs. And to our shareowners, our friends, our suppliers and customers, thank you all for your commitment, your belief in ATCO. It is such a great honor to be with all of you here today. And now, I would like to open it up for any questions or comments. I know we've gone well over the time allowed, because the gift of the gab is standing right up here. RD, when he was standing up here, actually would ask his assistant to have the Shepherd's hook out, take him off the stage. But I don't do that.

Any questions? Yes? Karl?

Nancy, Karl Ruud here. Long time ATCO shareowner and proud, and I don't need to tell everybody here how great a company is and any. But the kind of worms I'd like to ask about is, what's your thoughts on AI and the potential overload of the systems? And is that a big opportunity for us moving forward? I mean, AI, for those who may not know, is artificial intelligence and the demand for electricity is extreme theoretically anyway. So that's my question.

It's a really good question, Karl, and it's certainly one that we've been considering because the housing of the machines that actually help AI work is these data centers, and they require a ton of electricity, and it has to be reliable. It has to be 24/7, 365 days a year. And it is a great opportunity. It's a great opportunity for Alberta. And I mentioned earlier on that Alberta is making forward steps in trying to address how the grid will operate under more strain and the requirements of large power generators to address the data centers. We aren't quite there yet. It's not quite decided as to how a new center, a new power generating station for a data center will interplay with the transmission grid. And so we're waiting, and we believe the Alberta government will have some pretty certain rules coming down pretty soon. But it's critical we get it right. And we, unlike many jurisdictions in North America or around the world, don't have the same integrated utility operations. So when you look at Texas, or you look at Duke Energy, the grand dam of utilities in the United States, they have the ability to offer the generation and the transmission, and the redundancy required for those data centers. And we don't have that in Alberta because of our deregulated system. So the generation operates separately, our transmission grid operates separately. And hopefully, the 2 shall meet in an economic way that will allow us to capture the opportunities. But right now, we're in a wait-and-see mode. Andrew?

This year, I'd like to ask a question to Adam Beattie. And I'm just wondering, the approach to tariffs that the U.S. is taking and whatever negotiations go on between the Canadian and U.S. governments on that issue, how do those tariffs affect your part of ATCO? And what can you and also our Canadian provincial and federal governments do to alleviate whatever difficulties those tariffs may cause?

Excellent question.

Thank you, Andrew. I think that's working. Well, firstly, we operate our Canadian and our U.S. businesses quite distinctly. So we have capacities for manufacturing, construction, fleets, independents. So cross-border issues really come back to raw material supply. And if we look at what we manufacture in Canada, about 75% of the materials that go into our products are locally sourced or sourced within Australia. So there's a minimal impact. And you can see the majority of the tariffs at the moment as hitting steel and aluminum or aluminum depending on where you are. Sorry, still working on that. So that's primary. So things like kitchen appliances going into our homes, we've seen some pricing on those items. But the majority of our products are built from timber. So we haven't seen any significant impact at this point in terms of tariffs that have directly caused a problem with our production and our raw material supply or logistics supply. We've actually seen some other benefits as well where like the cost of fuel has decreased and logistics is a big part of what we do. So there are offsets to get into the detail, I probably need a couple of hours, but that's it. I think the governments have worked reasonably, my opinion here. Governments have worked reasonably well to combat response to tariffs and the concerns. The focus really hasn't -- I think the U.S. government has realized, if you look at the construction industry in the U.S., about 84% of their raw materials come from outside of the U.S. in their own construction industry. That's an industry statistic. I don't know the exact quote, but don't quote me on it. But that's a big portion of dependability within their economy. So I think, hopefully, rationality comes through. And I think the trade relationships and partnerships between the 2 countries unite back again, and they see that there's a cohesion between the supply and the movement of materials and products back and forth between those countries. For us, personally, we are a manufacturer. We have local manufacturing, and we're designed that way because we have a logistics radius of transport by trucks. So cross-border transport isn't a major impact for us other than material inputs.

That's fine. Emil?

I'd like to commend ATCO for their performance with the Jasper fire. My question, I think, is addressed to Bob. Could you elaborate on the status of the Puerto Rico contract?

Very good question.

It sounds like it was planted. To be totally transparent is it's a challenge in Puerto Rico. It's a challenge because there's 2 components of funding to rebuild the Puerto Rican system. One is from Washington, with the funding from Washington. That funding is only required or only available to actually replace what a hurricane destroyed. The second problem, though, in Puerto Rico is that the system hasn't been maintained for many years. So the funding for that part of the rebuilding of Puerto Rico electric distribution transmission system needs to come from the island of Puerto Rico. So there's a lot of challenges with funding down there. And there's a new government that has been put in place. And so we're spending a lot of time trying to identify the path forward with the government in Puerto Rico. And I'm an optimistic person. I'm optimistic that we'll find a way through this whole thing, but it is a day-to-day challenge in how we go about operating in Puerto Rico. It's unfortunate, if you follow the news on December 31 of last year, on the 2 days before good Friday at Easter this year, the whole island was out of power. So I think we take that for granted many times sitting in Canada here. But when you're in Puerto Rico and you have no power, it's pretty tough. And of course, we're the company that's providing the transmission distribution for the island. So it's -- we're definitely front and center with that. If I had a positive comment, the only difference about Puerto Rico losing power versus losing power here in Alberta, if it had happened here on New Year's Eve, it would have been pretty cold, and so that's one positive thing for Puerto Rico. It's not an excuse and it's not acceptable. So we're working really hard. I wish I had a definitive answer as to a time line as to when we'll have it all resolved. It's a 15-year contract. So it's going to take some time to rebuild the island.

[Indiscernible]

No, no.

No.

They're still paying their bills for us. Yes.

Bob, it might be worthwhile, though, when the Easter outage occurred, the blackout occurred, how long did it take to get the island back up?

Yes. Good point, Nancy. We were back up and running for what we could control in about 30 hours. So which -- that sounds really good. It's actually kind of, somewhat, embarrassing that we've gotten really, really good at restarting the island. That means you've had a lot of chances to actually do that. But it was really -- our team down there worked around the clock. And I know the island recognizes that for them. But again, we shouldn't be losing power, is the point.

That's the point. And much work to do on that, Emil. Anybody else? Norm, did you say you had a question?

Karl sort of stole my thing on AI. But my question to AI, and there's a fairly good technical market in Canada or in Calgary, especially, just subtly working behind the scenes. We don't see much of it. But on AI, is there any way that ATCO is looking at taking the legalities and segregating the AI thing out based on the Saudi stuff here the other day to make it sort of like an independent company where we aren't having to follow just electric regulations.

Maybe -- maybe in our grandchildren's time. I think that the premier believes that you can actually have stand-alone, self-generating, redundant, 24/7 reliable power for the data centers, not attached to the grid. And we have seen that in Saudi. They have done that. But it is subsidized. And if you wanted to do it without subsidies, the economic path to being a stand-alone and building your own redundancy, your own generation, your own connection, the cost far outweighs what you could go to Texas or Arizona or Florida or the Eastern states to be able to replicate. So I think that's an economic impediment to be a stand-alone. We really have to find a way to integrate, use the grid, deliver the reliability, the redundancy that they need through the grid with some excess power. And I think that's key to all of us as users of electricity in this province. And its key to our businesses that we have enough electricity that there aren't shortages and shooting the price sky high. We've all felt the strains of affordability of our utilities and all the people in ATCO are customers just like everyone else. So it's -- we need to get this right. And I really believe natural gas is the most abundant fuel we have in this province. It's the lowest cost. What is it? Where's Jason? $1.5 or Bob, $1.5.

$1.11, yesterday.

$1.11 for natural gas, practically free, Jason Kenney said. Why aren't we using that more in our province to really bolster economic development using our natural gas. And that's where I really do believe and hope the new federal government, I believe the Prime Minister means what he said. that we want to be an energy superpower. And the only way we get to be an energy superpower is to make sure we not only use domestic natural gas and oil for our industries, done in the cleanest way around -- from anywhere around the world and also use it as an export. But the key is using it ourselves, hence, the corridor conversations. So anyway, I do think the AI opportunities are -- they're vast, they're large, they're exciting, but we have to get the details of the regulation and the legislation right. And the government is working on it earnestly. Yes. Anything else? Well, once again, if I may, my mom, Linda and our families would love to see you throughout the year at Spruce Meadows for the 50th anniversary. Thank you all very much for joining us this morning.